Backing for mergers ​and acquisitions will involve stricter standards, including the need to comply with relevant industrial policies and foreign exchange management requirements

The China Securities and Reform Commission will support the mergers ​and acquisitions of high-quality Chinese companies listed overseas and domestic enterprises whose development directions are in line with national industrial strategies, Yicai.com reported.

Companies registered in China but listed overseas are known as “overseas Chinese companies,” whose relationship with China’s domestic A-share market has long been delicate, the report said.

Since the beginning of 2016, regulators have quietly cast a pause in the mergers ​and acquisitions of so-called overseas Chinese companies with local companies, a common tactic that overseas Chinese companies use to return to China’s domestic A-share market.

In early November of this year, the restrictions have cooled. The principle statement, which was made on November 3, stated that the commission will support mergers ​and acquisitions but on stricter standards.

These requirements include the need to comply with relevant industrial policies, foreign exchange management requirements and other factors. Applications from companies who fail to reach these requirements will not be processed, the report said.

The commission will also continue to pay close attention, impose stricter requirements and crack down on mergers and acquisitions with illegal insider trading behaviour, the report added.